Form 511 State of Oklahoma

							Oklahoma and
health reform

Grace-Marie Turner
  Galen Institute

 August 12, 2008
     Who are the uninsured?

 Workers transitioning between jobs
 Small business employees
 Workers in low-wage jobs and their
  dependents
 Young adults
 Minorities, especially Hispanics
 Undocumented workers
                                 Uninsured rates in 2006
                                                                         Number                                                Percent




         Wisconsin*                                                      481,000                                                8.8

         Oklahoma                                                        661,000                                               18.9
         Texas                                                           5,704,000                                             24.5

         United States                                                   46,995,000                                            15.8

*According to the U.S. Census Bureau press release on the Current Population Survey, “the rates for Minnesota, Hawaii, Iowa, Wisconsin and Maine were
lower than the rates of the other 45 states and the District of Columbia. The rates for these five states were not statistically different from one another.”


Source: U.S. Census Bureau, Current Population Survey, 2007 Annual Social and Economic Supplement. Last revised: August 28, 2007.
http://pubdb3.census.gov/macro/032007/health/h06_000.htm.
   Income distribution
State       Median Annual Income

Wisconsin   $48,874

Oklahoma    $40,001

Texas       $43,425

U.S.        $46,071
Oklahoma’s health insurance market
     36 coverage mandates. (Idaho has the
     fewest with 14. Maryland the most w/ 60)*
     Oklahoma does not require guarantee issue.
     ME, MA, NV, NJ, NY, VT require all health
     plans to guarantee issuance to individuals **
     Oklahoma has modified community rating in
     the individual market; NJ, NY, VT require
     full community rating for all individual policies
 * http://www.cahi.org/cahi_contents/resources/pdf/HealthInsuranceMandates2008.pdf
 **Summary of State Guarantee Issue and Rating Requirements. America‟s Health Insurance Plans. December 2007.
               Cost of mandates
Mandated benefits currently increase the
cost of basic health coverage from a little
less than 20% to more than 50%,
depending on the state and its mandates.*
Numerous mandates and heavy
regulations drive up costs. New Yorkers
pay on average 3.5 times as much as
residents of Iowa for insurance. ($98 vs.
$338)**
    *“Health Insurance Mandates in the States 2008,” Council for Affordable Health Insurance, January 2008. www.cahi.org
    **”The Cost and Benefits of Individual Health Insurance Plans: 2007” Forrester Research based upon eHealthInsurance data
Cost of individual insurance
I could buy a $3,000 deductible policy in
Oklahoma City for $200/mo. on
eHealthInsurance.com* The most expensive is
$400/mo. for a PPO with a $1,000 deductible.
Choice of 10 plan options. Someone 20 years
younger would pay $100/mo. for a higher
deductible plan and $275/mo. for a lower-
deductible policy.
eHealthInsurance says the average individual
policy nationwide costs $148 a month.
                                  * http://www.ehealthinsurance.com
Costs of Job-Based Insurance
 Individual
  – Oklahoma     $4,088
  – U.S.         $3,991

 Family
 – Oklahoma      $10,985
 – U.S.          $10,728

               Kaiser Family Foundation, State Health Facts 2005. www.statehealthfacts.org
 Many states believe that a
high uninsured rate impacts
 the business climate and
 quality of life for citizens.
Pressure for government to fill the gap:




        $0         Income       $75,000
          Massachusetts
      and universal coverage
Former Gov. Mitt
Romney worked with
Democratic legislators
to pass sweeping
health reform

How is it working out?
Massachusetts Healthcare Reform
 Medicaid money was the impetus for creating
 the MA Health Reform Plan
 The state stood to lose $385 million in
 uncompensated care funds if it didn‟t take
 action on reform
 Therefore, the Republican governor,
 Democratic legislature, hospitals, businesses
 and other interest groups were highly
 motivated to develop a plan
 Positive aspects of the MA plan
The health insurance “Connector” allows workers to
purchase insurance from competing private insurers
Those with incomes up to 300% of poverty receive
subsidies to buy coverage
Employees can purchase health insurance with pre-
tax dollars
Insurance is portable and can move with a worker
from job to job
The plan addresses the “free rider” problem by
mandating that everyone must be in the system
Danger points of Massachusetts‟ plan
  The state has imposed a mandate on individuals
  to purchase insurance while leaving in place
  rules and mandates that have driven out
  competition and driven up costs, such as
  guaranteed issue and more than 40 coverage
  mandates.

  The only policies that will be offered through the
  state program to those under 300% of poverty
  eligible for a new state subsidy have no
  deductible and must cover all mandates.
  Only offered by Medicaid HMOs.
     Dangers for companies
Employers face stiff penalties if they do not offer
access to insurance.

The legislature inserted in the law a provision that
forces employers with 11 or more employees to
pay a $295 per-employee fine if they don‟t offer
access to health insurance and to pay health costs
above $50,000 for their uninsured workers who
seek free care.

Individual mandates quickly become employer
mandates. Employers must pay at least one-third
of premium costs, and legislators are considering
boosting their required share
  Bureaucracy and enforcement

The law requires every employer and employee in the
state to sign "under oath" a Health Insurance
Responsibility Disclosure form.

It creates at least 10 new boards and commissions, such
as the Health Care 10 Quality and Cost Council, the
Payment Policy Advisory Board, and the Health Access
Bureau.

New and existing state agencies will be checking on
individuals' insurance status, monitoring their income to
see if they qualify for subsidies, and tracking individual
health habits (like smoking and wellness activities).
Pushback from individual mandate
“The dreaded Individual Mandate Call (IMC)
usually begins, „I‟m uninsured. I heard that a
new law says that everyone in Massachusetts
has to have health insurance by July 1st or they
could get fined on their taxes.‟
“People are angry and, at times, very angry.
Earlier today, a caller responded, „So you mean
to tell me that I‟m punished even though I only
have $10 left each month for food after I pay my
bills?‟ Then she violently hung up on me…We
hear this story often.”
                   Massachusetts‟ Health Care for All Helpline blogger
                   Kate Bicego
  Massachusetts Connector
Four premium levels for same coverage through
the subsidized Commonwealth Care program

Six health insurance plans offer coverage
through the unsubsidized Commonwealth
Choice plan

Many continue to be covered under job-based
plans
Largest enrollment in no-cost plans
                    Enrollment by Plan Type as of May 1st
                      Total: 176,879 enrolled individuals



                                                       Type 2B (150-
                                                         200% FPL),
    Type 2A (100-                                       29,234, 17%
      150% FPL),
     47,469, 27%
                                                             Type 3 (200-
                                                            300% FPL, low
                                                              premium),
                                                              16,716, 9%




                                                              Type 4 (200-
                             Type 1 (0-100%                  300% FPL, low
                              FPL), 79,039,                 copays), 4,421,
                                  45%                             2%
     Commonwealth Care
  Enrollment Nov „06 – Dec „07
                          Enrollment (thousands) as of the first of the month
160
           Premium-paying
140        No premium


120


100


80


60


40


20


 0
      Nov '06   Dec '06   Jan '07   Feb '07   Mar '07   Apr '07   May '07   Jun '07   Jul '07   Aug '07   Sep '07   Oct '07   Nov '07   Dec '07
          Commonwealth Care
      Enrollment Sept „07 – May „08
                Enrollment (thousands) as of the first of the month
200




          Premium-paying
          No premium
150




100




 50




  0
      Sep '07   Oct '07   Nov '07   Dec '07   Jan '08   Feb '08   M ar '08   Apr '08   M ay '08
Summary of Costs by Plan Type
          Plan 1   Plan 2   Plan 3   Plan 4



Monthly   $0       $0-$35   $70-     Depends
Premium                     $105     upon plan
                                     choice

Max OOP $36 /      $250 /   $500 /   Phased
(Med/Rx) $200      $250     $500     out 7/1
            Enrollment in
         Commonwealth Choice
         1. Enrollment (members) as of the first of the month
20,000
                                           17,490      17,907    18,122
                                17,161
                    15,922
         14,698
15,000



10,000



 5,000



    0
         Dec '07    Jan '08     Feb '08    Mar '08     Apr '08    May '08
         Typical connector prices
                    Coverage             Annual premium

Young adult         $2,000 deductible         $2,280

                    HMO/ no ded.              $6,096

Young family        $1,500/$3,000 ded.        $7,200

                    HMO/ low ded.            $18,300

Empty-nest couple   $2,000/$4,000 ded.        $7,800

                    HMO/ no ded.             $21,804
      Risks moving forward
For consumers…
– State approved a 12% insurance rate increase
  for next year
– Fines to individuals continue to rise
    $219 in first year
    Up to $912 this year; $1,824 for uninsured couples
– Shortage of doctors in some areas taking new patients
Rising costs for taxpayers
Crowd-out of job-based insurance
      Taxpayer costs are rising

State budget calls for $869 million in fiscal
2009, but the bill could be closer to $1.1 billion

About 330,000 Massachusetts residents are
newly enrolled in coverage, but at least 263,000
are in free or subsidized plans

A new study shows that mandates add $1.3
billion to the cost of health insurance a year
                      2008 Draft Affordability Schedule
                            Proposed March 20th

           Individuals                             Couples                               Families
       Annual Gross          2008           Annual Gross           2008            Annual Gross           2008
      Income Range         Proposed        Income Range          Proposed         Income Range          Proposed

$0 - $15,612 (150%)          $0       $0 - $21,012 (150%)          $0       $0 - $26,412 (150%)           $0

$15,613 - $20,808 (200%)     $39      $21,013 - $28,008 (200%)     $78      $26,413 - $35,208 (200%)      $78

$20,809 - $26,016 (250%)     $77      $28,009 - $35,016 (250%)    $154      $35,209 - $44,016 (250%)     $154

$26,017 - $31,212 (300%)    $116      $35,017 - $42,012 (300%)    $232      $44,017 - $52,812 (300%)     $232

$31,213 - $37,500 (360%)    $165      $42,013 - $52,500 (375%)    $297      $52,813 - $70,000 (398%)     $352
$37,501 - $42,500 (408%)    $220      $52,501 - $62,500 (446%)    $396      $70,001 - $90,000 (511%)     $550

$42,501 - $52,500 (505%)    $330      $62,501 - $82,500 (589%)    $550      $90,001 - $110,000 (625%)    $792

>$52,501                     n/a      >$82,501                     n/a      >$110,001                     n/a




                                                                                                          29
So what is the alternative?
        Determinants of Health

                  Social     Health
               Circumstanc    Care
                    es        10%
Environment        15%
     5%




                                      Behavior
              Genetics                  40%
                30%
       The Vision:
 Engaging consumers as
 partners in managing health
 costs and getting the best
 value for health care dollars
        Common themes
Focus on:

 Personal responsibility by recipients
 Incentives for patient participation
 Wellness and prevention services
 Better coordination of care
 Greater focus on disease management
 Data collection and outcomes reports
   Some tools available now
Flexible Spending Accounts
– available since the mid „80s
– “Use it or lose it” flaw
Health Reimbursement Arrangements
– Created in 2002
Health Savings Accounts
– Available since 2004
Top three priorities for reform

Lighten the regulatory burden on health
insurance and services to boost competition

Allow greater portability of health insurance

Provide new subsidies for the uninsured
    An innovative program:
   The Healthy Indiana Plan
A novel way of increasing access to health
insurance for the uninsured
A jointly-funded POWER account -- $1,100
Medicaid coverage for medical costs above
that, including preventive care
Unused POWER balances roll over to help
fund next year‟s account
      Georgia’s new law
Allow individuals to deduct HSA premiums
from state taxes
$250 annual tax credit to small businesses
to enroll employees in HSA plans
Allow insurance companies to reward
people for healthy behavior
      Federal proposals
Give individuals and families tax
deductions or credits to purchase private
health insurance
Allow people to buy health insurance from
other states
Create more options for people to use
SCHIP and Medicaid dollars for private
coverage
What will the future hold?
           Elections will determine the
             direction of change. But…

             The new president will definitely
             determine the direction of reform,
             toward a greater role for
             government in our health sector
             or a much more functional
             private and competitive market
             for health insurance and health
             care
Contact:

Grace-Marie Turner
Galen Institute
www.galen.org
(703) 299-8900
gracemarie@galen.org